Advertising groups lambaste Net address expansion

ICANN's plan to dramatically expand the number of Internet domains means trademark holders face big new expenses and risks to their brands, advertiser groups say.

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6 min read

Advertisers and the Internet's overseers seem unable to reconcile a profound disagreement about the future of Internet addresses.

Three prominent groups representing advertisers--the Association of National Advertisers (ANA), Interactive Advertising Bureau (IAB), and the American Association of Advertising Agencies (4A)--have come down hard on a program to dramatically expand the number of Internet addresses beyond .com and .net to a new class that could include everything from .berlin and .movie to .plumber and .pepsi. The International Corporation for Names and Numbers (ICANN), which oversees Net addresses globally, approved in June the program to expand these so-called generic top-level domains (GTLDs) starting in 2012.

ICANN logo

The three groups urged ICANN to reconsider the domain-name expansion program. The strongest terms came from the ANA, which outlined its concerns in an August 4 letter to ICANN that threatens broader and "far more expensive" action than just strongly worded correspondence.

"Should ICANN refuse to reconsider and adopt a program that takes into account the ANA's concerns expressed in this letter, ICANN and the program present the ANA and its members no choice but to do whatever is necessary to prevent implementation of the program and raise the issues in appropriate forums that can consider the wisdom, propriety, and legality of the program," ANA said in its letter.

It sent copies to senior officials at White House, Commerce Department, and House and Senate judiciary committees. And in July, it sent a letter (PDF) to the Commerce Department's National Telecommunications and Information Administration saying "ICANN has violated its own Code of Conduct and abrogated its Affirmation of Commitments with the Department of Commerce," saying it shouldn't be taken for granted that the department will renew its contract with ICANN to manage Internet names.

But ICANN itself vigorously defends the program, dismissing many criticisms as ill-informed.

"The assertions in your letter are either incorrect or problematic in several respects," said ICANN CEO Rod Beckstrom in his response (PDF). After taking six years to come up with the program, ICANN shows no sign of giving an inch.

ICANN's tagline is "One World. One Internet." But the dispute reflects how hard it is to squeeze opposing agendas into a single globe-spanning technology.

GTLD expansion plan
Under the generic top-level domain expansion plan, registries would apply to operate new domains that could include generic terms such as .movie or .eco. Registries would control the new domains and potentially sell others rights to register their names, much as Network Solutions sells rights to use .com today. ICANN plans to accept the first applications from January 12, 2012, to April 12, 2012, and ICANN could add the new domains to the Internet itself before the end of 2012.

It's not cheap to participate: ICANN charges registries an $185,000 application fee and $25,000 a year to operate a new generic domain registry.

One company that's expressed an interest is camera and copier maker Canon; .canon e-mails and Web addresses bring an opportunity to reinforce the brand and provide some assurance to a customer that communications aren't with a fake entity.

But it's possible that a registry could set up the .camera domain, at which point Canon might feel compelled to pay that registry for canon.camera. There could be different reasons for that move: Consumers might try to load that Web address, or companies might want to ward off cybersquatters--those who register a brand name address in hopes of selling it at a premium to a trademark holder.

Another possible problem: the financial uncertainty of auctions to decide who gets to operate a particular domain registry. That's not the sort of problem Coca-Cola would have, but there are plenty of cases where companies in different industries have the same or similar names.

To deal with these potential problems, ICANN has established a trademark clearinghouse to track trademarks and a mechanism to unplug trademark-infringing domains.

"We've created a brand-new system to allow...a very rapid takedown" of a domain found to be infringing trademarks, outgoing ICANN Chairman Peter Dengate Thrush said in June. "The tradeoff is...if someone brings a case, it's got to be argued and proved to a pretty high standard."

Dissatisfied advertising groups
That's not enough to satisfy the advertising groups. ANA, which says its 400 members have 10,000 brands and spend more than $250 billion a year in advertising and marketing, launched the current round of objections with its August 4 letter. Chief Executive Robert Liodice said:

By introducing confusion into the marketplace and increasing the likelihood of cybersquatting and other malicious conduct, the Program diminishes the power of trademarks to serve as strong, accurate and reliable symbols of source and quality in the marketplace. Brand confusion, dilution, and other abuse also poses risks of cyberpredator harms, consumer privacy violations, identity theft, and cybersecurity breaches...

Brand owners are essentially being forced to buy their own brands from ICANN at an initial price of $185,000. For companies with robust trademark portfolios considering multiple TLDs, the application costs can be exorbitant because a separate application must be filed (and paid for) for each separate name. At the end of this name-selling application process, if there are two applicants seeking TLDs with confusingly similar strings, ICANN determines the winner by auction, at costs to brand owners that could be staggering.

Then, on Monday came the IAB's criticisms. Among other concerns, the group said the GTLD expansion will offer cybersquatters "an opportunity to harm a brand's integrity and/or profit greatly from their bad-faith domain registrations." IAB CEO Randall Rothenberg said:

ICANN's potentially momentous change seems to have been made in a top-down star chamber. There appears to have been no economic impact research, no full and open stakeholder discussions, and little concern for the delicate balance of the Internet ecosystem, This could be disastrous for the media brand owners we represent and the brand owners with which they work. We hope that ICANN will reconsider both this ill-considered decision and the process by which it was reached.

And 4A CEO Nancy Hill criticized the ICANN plan in these words:

"We are very disappointed in the position taken by ICANN concerning the assignment and sale of new domain names. These changes would cost brand owners billions of dollars, severely, if not irreparably, diluting the value of trusted and respected brand names, as well as abrogate the good work 4A's members have done on behalf of their clients.

All marketers share the goal of a stable global marketplace, served by an Internet system that consumers can rely on to accurately reflect the quality and history of a product or service. ICANN's actions would remove that trust and place consumers at a significant disadvantage in making marketplace choices and decisions.

ICANN appears willing to risk the advertising groups' wrath, though.

In its response to ANA, ICANN said the GTLD process has safeguards that eliminate the need for companies to apply for domains defensively, merely to protect trademarks rather than to actively use them with a new domain. It defended its process as very much bottom-up, taking into account abundant feedback.

And Beckstrom--who will leave his role at ICANN on July 1, 2012--said ICANN won't bow to the views of a single group, even if it's one as powerful as major advertisers.

"Please be advised that ICANN will vigorously defend the multi-stakeholder model and the hard-fought consensus of its global stakeholder participants, its duty to act in accordance with established bottom-up processes, and its responsibility to the broad public interest of the global Internet community, rather than to the specific interests of any particular group."

Updated at 7:18 a.m. PT to correct the name of the Interactive Advertising Bureau.